In February, Romania recorded the highest level of the harmonized index of consumer prices (an inflation indicator that allows comparisons of inflation at the European level) in the EU, at 7.1%, followed by Iceland (5.3%) . Latvia, Denmark and Italy had the lowest inflation rates (below 1% each), according to Eurostat.
Inflation erodes purchasing powerPhoto: Andriy Popov / Panthermedia / Profimedia Images
That’s right, each country calculates inflation differently, because consumption habits differ from country to country.
When measuring price increases, the National Institute of Statistics looks not only at the goods on the shop shelves, but also at how much they matter in our consumption.
And in the last 10 years, a period that HotNews researched, this consumption has changed radically. For example, the UK takes the price of fruit pies and donuts into the inflation calculation, and France, when measuring inflation, looks carefully at the prices of frog legs, snails and sexual services.
The biggest changes in the importance we give to items in the INS list are: paying for hotels on vacations (which has increased 72 times in 10 years), followed by clothing (especially fabrics, where the share of spending in the consumption basket increased 8 times), washing machines and milk (more than 3 times higher shares).
At the opposite pole, the biggest decreases in the shares in the consumption basket are for sugar, bread, train travel whose impact on consumption has been reduced by almost half compared to 2013.
See here the changes in the 10 years of the shares of products in consumption
The weights used to calculate the CPI are obtained from the Family Budget Survey (ABF) and result from the structure of the average monthly expenses incurred by a household for the purchase of goods and for the payment of services necessary to satisfy living needs. Annually, the structure of expenses incurred by the population is analyzed and updated.
UK includes donuts and apple pie when calculating inflation
The basket changes every year, removing items that are no longer representative of consumption and adding others that have become relevant – especially from the IT&C segment.
The UK takes into account the prices of mashed potatoes, fruit pies and donuts when measuring inflation in the Kingdom. Potato purrees were introduced to the list in 2018.
Also, the prices of a caravan holiday or e-liquids are calculated separately.
France looks closely at the prices of frog legs and snails, and in the “meat” chapter it has dedicated chapters for rooster, quail or pheasant meat.
Germany’s affinity for meat can also be seen in the list against which inflation is measured. The price of bratwurst and schnitzel matters a lot. Spicy ketchup also made the list.
Italy confirms the passion for cooking by measuring edible oils and cooking oil separately. Also, the prices of “sauce tomatoes” – distinct from “cooking” tomatoes – are also taken separately. Fish are also divided into farmed and freshwater fish.
When it comes to car prices, the Netherlands measures ‘mini class’, ‘compact class’, ‘compact middle class’, ‘mid-range’, ‘Midi-MPVs’ and SUVs separately.
France specifically and uniquely includes prostitution – this means the “tariff” of prostitutes as an indicator of inflation
In September, harmonized index of inflation was approximately at the same level in Romania, Slovakia, Croatia and very close to that of Belgium. However, the standard of living in these countries is completely different.
Using data from the International Monetary Fund, we looked at how different the consumption of people in different countries is. In other words, how much the various expenses weigh in the consumption basket.
The different weights of the consumption basket show you the cultural pattern of consumption or the level of economic development.
A country can change the weights assigned to different categories to reflect changes in the way consumers spend their budgets over time.
The items in a country’s basket and the weights assigned to the categories of goods and services in the basket can reveal what consumers prioritize, or what their national economies have in particular. A useful tool for comparing weights is known as Engel’s Law.
“The poorer a family is, the greater the share of food expenses.” Ernest Engel was a German statistician who processed household expenditure data in the Kingdom of Saxony during the 19th century.
France: In the distribution of CPI weights, the category “miscellaneous goods and services” includes: payments for sex, bodyguards, or astrologers
Alcohol, tobacco – 4.5%
Clothing, footwear – 3.7%
Food, beverages – 15.8%
Housing, utilities – 15.3%
Health- 11.2%
Recreation, culture- 8.4%
Restaurants, hotels – 6.0%
Transport- 13.3%
UK: The spending pattern of the British matches that of Germany to a very large extent
Alcohol, tobacco – 3.5%
Clothing, footwear – 6.1%
Education- 3.0%
Food, beverages – 8.9%
Housing, utilities – 32.8%
Health- 2%
Restaurants, hotels – 7%
Mexico: Families spend a larger share of their money on food than those in rich countries
For the inflation calculation, Mexican households were observed to spend a higher share of their money on food than those in richer countries such as the US, UK and Canada, but less than those in poorer ones such as Ethiopia and Nigeria.
Alcohol, tobacco – 2.7%
Clothing, footwear – 4.8%
Education -3.5%
Food, beverages – 25.8%
Housing, utilities – 19.6%
Recreation, culture- 4.9%
Restaurants, hotels – 9.5%
Transport- 13.8%
Italy- Low education costs
Along with fellow EU members France and Germany, education accounts for very little when it comes to calculating inflation in Italy: around 1% of the measure, a result of the free and cheap state-subsidized education available in all three countries.
Alcohol, tobacco – 3.6%
Clothing, footwear -6.5%
Education- 1.1%
Food, beverages – 19.3%
Housing, utilities – 11.2%
Restaurants, hotels – 8.3%
Transport- 12.7%
Germany – Housing expenses are weighted at around 32% of their total expenses
German consumers’ spending on housing is weighted at around 32% of their total spending. In neighboring France, this figure is only 15%. In the EU, only Greece and Denmark have higher spending on housing as a share of total household spending.
Alcohol, tobacco – 3.8%
Clothing, footwear – 4.5%
Education- 0.9%
Food, beverages – 9.7%
Housing, utilities – 32.5%
Transport- 13%
